With the end of financial year (EOFY) nearing it is important to be organised and not view this period as a burden. By being organised throughout the year it means that there is less of a chance that you’ll be overrun with paperwork or searching high and low for missing receipts come EOFY. It is recommended that you keep on top of your books monthly, reconciling and closing off your accounts monthly too, as this enables you to keep track of your incomings and outgoings. As well as the business being up to date with its filing each month making sure to avoid a mountain of paperwork at the end financial year.
Below are some useful recommendations for small to medium sized businesses about how to approach the end of financial year. These are things to consider as well as actionable items to add to your end of financial year to do list.
Review the end to date.
First and foremost, take this time to look back at the business’ successes and failures. How is the business tracking against its short-term goals and long term strategy? Consider what areas have exceeded your expectations and which areas could do with some improvements. From this information it will allow you to create action plans for the following financial year. Make sure that these action plans still align with your three year strategy as you don’t want to make any drastic changes without making sure they align with your overarching goals and business objectives. Forbes has a template to use as a guide.
This time of year is also a good time to take account of what your business owners. Take stock of the business’ assets, whether this is your inventory or fixed assets it is important that you know where your business stands for the next financial year. Therefore, taking stock of any missing items or leakage that needs to be written off is important. Also take into account your fixed assets, things like property, equipment. Ensure that you remove or register any changes to your assets during this financial year, and that the life expectancy and tax depreciation is calculated correctly too. If you are unsure how to calculate tax depreciation the ATO has a calculation tool to help.
Log your financial goals and cross off the low hanging fruit
If you are like most business owner you are already thinking about the next financial year and setting yourself goals to meet and exceed. However at the end of financial year it is good to look back at the year and see what you achieved. What were the big tick items in terms of finance? Did you reduce your debt, did you increase your assets?
Once you’ve reflected on those achievements you’ll be more likely to have the motivation to finalise some of the stragglers. Think about some of the productive items you can finalise, things like forecasting pay rises and ways of paying off any debts.
Crossing the t’s and dotting the i’s
Once you’ve worked through the above there are some outputs you need to have finalised at the end of the financial year. Below is a checklist of some essential tasks that businesses need to complete:
- Complete a profit and loss statement
- Make a summary of creditors and debtors
- Update and finalise you asset records
- Complete and finalise you income tax returns
- Recognise superannuation requirements
- Remember to make check and apply any tax considerations.
If any of the above information if unclear to you, the best website to head to is the Australian Taxation Office which has full details of obligations and requirements.